Have you read the book 'Lifeonaire'?

[Jeff Stephens]

I recently read the book 'Lifeonaire' by Steve Cook, which has had a big impact on my thinking over the last couple of weeks. In a nutshell, the book is about designing your life so that you're rich in life experience (time with your family, time doing the things you love, the ability to give to the causes that matter to you, etc.) rather than in just money. It was written by a real estate investor, so it has that bent, and essentially makes the argument that if a sense of freedom is what you seek, then debt doesn't usually add to your sense of freedom.  

It's important to note, the book does NOT say "Debt is Bad," but rather that debt doesn't usually make you feel more free.  Also, if a sense of freedom is not your real goal, then the book will not be as relevant either.

Have you read the book? If so, I'd love to hear some of your thoughts on the principles around debt. I have long been in the "there's a difference between Good Debt and Bad Debt" school of thought, and I do still believe that Good Debt is an indispensable tool. Plus, of course, real estate debt brings lots of other strategic advantages for taxes, higher cash-on-cash returns, etc.  But from reading this book, I feel moved to begin having a different strategy for my personal finances/investments than for my business investments. My current thinking is like this:

My Business

Maintain a high level of leverage using real estate debt until I can reach a "critical mass" of assets, then begin to pay the debt down to convert to cash flow.  Any debt in this category is offset by a corresponding income stream from the asset.

Personal Finances

Pay down my personal debt as soon as I can so that I feel less pressure about making payments out of my earned income. Because there are no corresponding income streams from these personal debt assets (cars, my house, etc.), I feel like I want to get rid of those now.

What are your thoughts as you weigh the different philosophies about debt in your LIFE and your BUSINESS?

[David Krulac]

I am not a member of Lifeonaire, nor have any business relationship with either Steve cook or Shawn McClosky.

I have meet Steve Cook on multiple times and have talked to him and find that we have some things in common and reached some of the same conclusions independently around the same time.  I did have 40 or 50 mortgages, that sort of thing happens when you do 800+ deals.  As I talked about on BP Podcast #82, I literally did not have any money when I started and outside financing was a big part of being able to buy real estate.  The first 11 properties that I bought were all essentially 100% financed.  For me to grow and acquire more properties I "had" to acquire more financing.  I got first mortgages, second mortgages, lines of credit, etc.  The millions of debt required huge monthly payments and Steve and I both came to the conclusion that we were working for the banks, which was the biggest monthly expense in our lives.  Writing $40,000 to $50,000 checks every month to banks is not a pleasant experience.

I stared a massive program to aggressively pay off mortgages, sell some properties and sharply reduce my debt load.  For the last 100 properties that I bought, I only got 1 new mortgage covering one property.  Whereas mortgage payments were my biggest expense, now that is not the case.

I also have heard Shawn McClosky speak on Lifeonaire, as we were both featured speakers at a real estate convention in Nashville in May, and had the opportunity to sit down at dinner with him then.

I have found both Steve and Shawn to be sincere and passionate about their investing philosophy.

@Rob K. 

 Thanks for reminding me about "The Wealthy Barber", by David Chilton, I've enjoyed that book as well and also and "Cashing in on the American Dream" by Paul Terhorst.  Both I would highly recommend.